Eco (Atlantic) Oil & Gas announces annual results, status of main assets
(WO) – Eco (Atlantic) Oil & Gas Ltd., an oil and gas exploration company focused on the offshore Atlantic Margins, has announced its audited results for the year ended March 31, 2024.
Financials. The company had cash and cash equivalents of $2.97 million and no debt as at March 31, 2024. Following a significant reduction in costs (including G&A, professional fees and operating expenses) as of the time of publication, Eco has a cash position of ca.$1.5 million. The company had total assets of $31.3 million, total liabilities of $1.25 million and total equity of $30.0 million as at March 31, 2024.
Post-period end. Following the successful farm-out deal of Block 3B/4B, Eco expects to receive a first tranche of $8.3 million during August 2024, subject to customary closing conditions being met. The resultant proceeds are expected to give Eco a cash and cash equivalents position of c.$10 million, with no near-term capital commitments for operational expenses.
Operations/South Africa
Block 1 (post-period end). In June 2024, Eco announced a farm-In into Block 1 Offshore South Africa Orange basin. The company will acquire a 75% Working Interest ("WI") from Tosaco Energy (Proprietary) Limited ("Tosaco") and will become operator of a new Exploration Right.
Block 1 has significant 2D and 3D seismic data already completed, and no additional seismic acquisition or drilling of wells is committed in the three-year carried period. Eco intends to complete the interpretation and analysis required for its planned work program with its in-house exploration team.
The farm-in is subject, inter alia, to normal Governmental approvals and no field activity is currently planned that requires environmental permitting.
Block 3B/4B. In March 2024, Eco and its JV partners signed a farm-out transaction with TotalEnergies EP South Africa B.V., who will become operator ("TotalEnergies") and QatarEnergy International E&P LLC ("QatarEnergy"). Under the agreement, Eco would retain a 13.75% participating interest in Block 3B/4B, offshore the Republic of South Africa.
Post-period end. On July 29, 2024, the company announced the signing of an agreement to sell a 1% interest in Block 3B/4B in exchange for cancellation of all of Africa Oil’s shares and warrants in Eco (worth C$ 11.5m).
Upon completion of the transaction, Eco will hold a fully carried 5.25% interest in Block 3B/4B Offshore South Africa, reducing from the current 6.25%. Upon closing, which is expected to occur in August 2024, Total will assume operatorship and will lead the drilling planning and preparations.
Block 2B (post-period end). In June 2024, the company relinquished its 50% WI Operated offshore Block 2B, where it drilled its 2022 Gazania-1 well offsetting the AJ-1 oil discovery.
The company has completed all necessary documentation, and environmental audits, and has informed the Petroleum Agency of South Africa ("PASA"), the regulator for the Government of South Africa.
Operations/Namibia
A multi-block farmout process remains underway for all or part of Eco's four offshore Petroleum Exploration Licences ("PEL"): 97, 98, 99, and 100. Eco holds operatorship and an 85% Working Interest in each PEL, representing a combined area of 28,593 km2 in the Walvis basin.
Post-period end. Eco added ~1,383km 2D data licensed on PEL100 (Tamar block) to its database, which is being technically evaluated and interpreted by the team to define additional seismic acquisition areas within the block, along with new leads and prospects.
Operations/Guyana
An active farm-out process continues for the offshore Orinduik Block. Eco was encouraged to note the recent news from neighbouring Stabroek Block, where the operator, ExxonMobil, is planning for a seventh development at Hammerhead.
Gil Holzman, President and Chief Executive Officer of Eco Atlantic, commented, “We made considerable progress across our asset portfolio during the financial year to 31 March 2024. This has been achieved at a time when we have had a strict focus on costs, which has seen the company operate with non-dilutive financings for the last two years, and agree a farm-out on Block 3B/4B, which will significantly increase our cash resources, and leaves tremendous upside potential on the table in the event a discovery is drilled on the block.
Holzman continued, “In Namibia and Guyana, we have active farm-out processes underway, and we are very upbeat about the number and calibre of the companies we have had in our data rooms. Both jurisdictions remain at the forefront of global hydrocarbon exploration, and we are confident of delivering a positive update on both in due course. We were also pleased to announce the deal with Africa Oil yesterday, which saw us agree the sale of a 1% interest in the block, in exchange for the cancellation of all of AOI’s shares and warrants in Eco, worth C$11.5 million.
“We are grateful to Africa Oil for their support since 2017, and this agreement will enable us to eliminate a c.16% overhang in Eco’s shares, which are locked up until the transaction closes and the shares and warrants are cancelled. I would also add that the deal was agreed using an $840 million valuation for Block 3B/4B, which values Eco’s 5.25% holding at ca.US$44 million. As ever, we continue to work hard to deliver value for all of our stakeholders and we look forward to providing further market updates in due course.”
